Snap Inc. said on Wednesday it would lay off about 1,000 employees, or roughly 16% of its full-time workforce, as the social media company moves to streamline operations under pressure from an activist investor and a challenging advertising environment.
Shares rose nearly 7% in premarket trading, even as the stock remains down about 31% so far this year.
The company also plans to close more than 300 open roles and expects the measures to reduce annualised expenses by more than $500 million by the second half of this year.
The social media company said it expects to record pretax charges of $95 million to $130 million related to the job cuts, mainly from severance payments and contract termination costs, with most of the impact anticipated in the second quarter.
“While these changes are necessary to realize Snap’s long-term potential, we believe that rapid advancements in artificial intelligence enable our teams to reduce repetitive work, increase velocity, and better support our community, partners, and advertisers,” Spiegel said in a letter to employees.
The cuts come weeks after Irenic Capital Management disclosed a stake in Snap and urged the company to take steps to improve performance and unlock shareholder value.
Activist investor pushes strategic overhaul
Earlier this month, Irenic said it holds an economic interest of about 2.5% in Snap’s Class A shares and sees significant upside potential.
The firm argued that Snap’s valuation could rise sharply with operational changes.
“Snap should be worth a lot more than $7 billion,” Irenic portfolio manager Adam Katz wrote, adding that its valuation could reach around $35 billion if the company adopts its recommendations.
The activist investor has called for a broad strategic reset, including cost reductions, portfolio optimisation and a greater focus on artificial intelligence.
“Snap should not continue doing what it has been doing. It’s not working,” Katz said. “And we’re not telling you anything you don’t know already.”
Among its proposals, Irenic suggested that Snap reassess certain projects and consider spinning off or shutting down its augmented-reality eyewear unit, Specs.
Ad market pressures weigh on outlook
Snap’s restructuring reflects broader pressures facing smaller digital advertising platforms.
Companies such as Pinterest are seen as more vulnerable to budget cuts from large advertisers, particularly during periods of geopolitical uncertainty.
Marketers have increasingly favoured larger platforms such as Meta Platforms and Alphabet, which offer greater scale and reach.
Snap’s reliance on advertising revenue has left it exposed to shifts in marketing spending, even as it competes with rivals including TikTok for user engagement and ad dollars.
The company had about 5,261 full-time employees as of December 2025, underscoring the scale of the planned workforce reduction.
Focus shifts to AI and shareholder returns
Irenic has also emphasised the importance of artificial intelligence as a future growth driver, urging Snap to expand its efforts in the space.
The company has already taken steps in this direction, including a partnership with Perplexity AI to integrate a conversational search engine into its platform.
The investor also encouraged Snap to pursue additional share buybacks, building on its existing plan to repurchase up to $500 million of Class A shares.
In response, Snap indicated it is open to shareholder feedback while continuing to execute its own strategy.
“We’ve taken steps to improve performance, strengthen free cash flow, and offset dilution, and will continue to evaluate actions that drive long-term value for all stockholders,” said board chair Michael Lynton.
While the latest measures signal a push toward efficiency and cost discipline, analysts say Snap still faces structural challenges in a competitive and rapidly evolving digital advertising landscape.
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